Follow us on facebook

Stocks Close Lower, But Leading Stocks Outperform

Stocks closed lower Friday on new tariff threats and a new inflation fear, but leading stocks generally outperformed.

X

The Dow Jones industrial average lost 0.3% and the S&P 500 dipped 0.2%. The Nasdaq composite gave up 0.3% as well.

Volume fell from Thursday’s levels, according to unconfirmed figures. Decliners topped advancers by 2-to-1 on the NYSE and by 15-to-13 on the Nasdaq.

Wall Street initially was shaken by the August jobs report. Payrolls rose more than expected and wage growth at a 2.9% annual rate was the highest in nine years. That sparked fears of inflation, and raised expectations that the Federal Reserve will indeed raise interest rates a fourth time this year.

The yield on the 10-year Treasury jumped 6 basis points to 2.94% as investor bet on a rate hike in December. A quarter-point increase is regarded as almost a certainty for this month’s Fed meeting.

Indexes bounced and were higher at midday, but then sold off anew on news that President Trump plans tariffs on $267 billion of Chinese imports, on top of $200 billion already in the works. Indexes closed near session lows.

But the IBD 50 shined, rising 0.9% late Friday in a solid show for the leading stocks. The Innovator IBD 50 ETF (FFTY) rose 1%. Only about half the IBD 50 stocks climbed, but a few made outstanding gains that caused the index to smash the major indexes.

Retail was one of the day’s the best sectors, as discount and specialty chains performed well.

Sprouts Farmers Market (SFM) broke out of a cup-without-handle base with a 28.39 buy point. Fast food chain Sonic (SONC) topped the 37.54 buy point of a flat base but closed below the entry. Neither stock’s relative strength lines made new highs, a drawback for these breakouts.